Malatsi's policy ‘workaround' for Starlink generates more heat than light — a legal fight looms

Daily Maverick

26-05-2025

A legal bunfight between Communications Minister Solly Malatsi and Parliament over Starlink is looming – it's important to unpack the legal issues around the minister's controversial proposed policy direction.
In the wake of the disinformation storm-fest that was the Trump/Ramaphosa White House meeting last week, a photo doing the rounds from that event is the pensive, hooded-eye stare of Starlink's head honcho and Trump's seeming point person on all things South African, Elon Musk.
Musk's irritation at South Africa's electronic communications legal and regulatory environment is legendary. In March, on his social media platform X, he said that his satellite communications system Starlink was not allowed to operate in South Africa ' because I am not black '.
A firestorm has since raged about whether or not South Africa should become another of the currently 18 countries in Africa in which Starlink operates, and what prevents Starlink from doing so already.
And on Friday, Solly Malatsi, the minister of communications and digital technologies, published in the Government Gazette a proposed policy direction to the Independent Communications Authority of South Africa (Icasa) 'to urgently consider alignment of the Regulations in respect of the Limitations of Control and Equity Ownership by Historically Disadvantaged Groups (HDG) and the Application of the ICT Sector Code, with the amended Broad-Based Black Economic Empowerment (BBBEE) ICT Sector Code'.
This was immediately interpreted as a pro-Starlink move, although neither the company nor foreign investors generally are mentioned in the proposed policy direction.
The proposed policy direction was met with a binary response on X and in press reports. Many commentators were hostile, with more than one warning that Starlink poses a national security threat to the country.
Others were upbeat about the prospects of Starlink being used to provide electronic communications services to the country, particularly in rural areas where fibre and mobile services are few and far between.
But as the saying goes, the proposed policy direction 'workaround' for Starlink has generated more heat than light and it is clear that the government is not speaking with one voice on this issue, perhaps unsurprisingly given that Malatsi is a DA Cabinet minister and the GNU's political tensions are legion.
On X on Saturday, 24 May 2025, the chairperson of Parliament's Portfolio Committee on Communications and Digital Technologies, Khusela Diko, posted an ' invitation ' to Malatsi to brief the committee on the policy direction on Tuesday, 27 May 2025, which, the invitation states, 'appear to be in contravention of the Electronic Communications Act and in favour of low-Earth orbit satellite provider SpaceX'.
The last part of the quote is telling in two respects:
First, the committee is, embarrassingly, not on top of its facts, because SpaceX (another Musk company) is not the provider of low-Earth orbit satellite services, Starlink is; and
The committee's beef with the proposed policy direction is that it 'appears to be in favour of' the satellite services provider.
So it seems that the animus of at least a faction of government towards Starlink is out in the open and this is clearly at odds with Ramaphosa's own wishes, since press reports say it was he who asked Malatsi to find a workaround that would allow Starlink to operate in the country, which resulted in the proposed policy direction published on Friday.
Malatsi has said on X that he will honour the invitation.
In previous spats between Malatsi and Diko, the minister has come out on top, most notably in his withdrawal of the fatally flawed SABC Bill. Despite her (incorrect) bluster that Malatsi lacked the power to withdraw a Cabinet-approved bill, withdraw it he did, and it remains withdrawn.
Icasa can, of course, amend its Ownership Regulations but not in a manner that is contrary to the provisions of its governing statutes, and therein lies the rub.
Parliament has seen fit to make specific references to the equity ownership of individual electronic communications licences (the kinds of licences that Starlink will need in order to operate in South Africa) in the Electronic Communications Act, 2005 (the ECA).
Originally, section 9(2)(b) of the ECA provided that an invitation to apply for an individual licence must 'include the percentage of equity ownership to be held by persons from historically disadvantaged groups, which must not be less than 30% or such higher percentage as may be prescribed'.
But that provision was amended in 2014 to now read: '… include the percentage of equity ownership to be held by persons from historically disadvantaged groups, which must not be less than 30%, or such other conditions or higher percentage as may be prescribed under section 4(3)(k) of the Icasa Act'. (Italics denote the additions introduced by the 2014 ECA Amendment Act).
Section 4(3)(k) of the Icasa Act 2000 provides that Icasa may make regulations on empowerment requirements 'to promote broad-based black economic empowerment'.
So the legal bunfight that is likely to play out turns on the words ' or such other conditions ' in section 9(2)(b) of the ECA.
So let's unpack the arguments and see where we land.
Diko's position seems to be that section 9(2)(b) of the ECA contains a provision that a minimum percentage equity ownership by historically disadvantaged groups of 30% is peremptory.
But the minister's argument is that amended section 9(2)(b), by dint of the words ' or other such other conditions ', empowers Icasa to prescribe regulations under section 4(3)(k) of the Icasa Act as an alternative to the minimum 30% equity ownership by persons from historically disadvantaged groups.
Certainly, it has long been settled in the eyes of the sector players that one has to have 30% B-BBEE equity to operate an individual licence, and to upend that would be a massive rearrangement of the sector as we know it.
But the minister's view is that these words mean Icasa can prescribe conditions to promote B-BBEE other than the 30% equity ownership by persons from historically disadvantaged groups mentioned in the first part of section 9(2)(b) to be included in an invitation to apply for an individual licence, as is evidenced by the use of the word 'or' in relation to 'such other conditions'.
The drafting of section 9(2)(b) of the ECA is execrable – as is much of the legislative drafting pertaining to the communications sector, sadly. It seems clear to me (and I daresay most industry participants) that the intention of the legislators was to lock in a 30% minimum equity shareholding for persons from historically disadvantaged groups, as evidenced by the peremptory provision in the last part of section 9(2)(b) of the ECA that Icasa may prescribe only a higher percentage of such equity ownership.
It seems clear that Diko is of the view that section 9(2)(b) requires a minimum 30% equity ownership by persons from historically disadvantaged groups to be included in invitations to apply for individual licences.
The minister's argument is that the words ' or such other conditions… as may be prescribed under section 4(3)(k) of the Icasa Act ' empower Icasa to prescribe conditions other than the minimum 30% equity ownership by historically disadvantaged persons provided for as an optional requirement in an invitation to apply for individual licences in the first part of the section.
Unfortunately, the drafting of clause 2.4 of the minister's proposed policy direction is equally execrable because he says that the use of the word 'or' is 'peremptory'. That is nonsense. The Cambridge Dictionary online defines 'or' as 'a conjunction that connects two or more possibilities or alternatives'. This means that none of the options is peremptory.
Given the dictionary definition of 'or' as a conjunction connecting two or more alternatives, I think there is merit in Malatsi's argument that Icasa has the power to prescribe alternative conditions to the 30% equity ownership by persons from historically disadvantaged groups. But it is awkward and seems counterintuitive as Icasa clearly lacks the power to prescribe a lower percentage of equity ownership by persons from historically disadvantaged groups.
But the fault, if there is any, is Parliament's because it passed the 2014 ECA Amendment Act and is entirely responsible for the wording which is now in the statute and which seems to, bizarrely, result in:
Icasa having no power to prescribe a lower percentage of equity ownership by persons from historically disadvantaged groups; and yet
Icasa having the power to prescribe conditions as an alternative to equity ownership by persons from historically disadvantaged groups, altogether.
Certainly until 2014, section 9(2)(b) granted Icasa no powers to prescribe an alternative to the then-peremptory requirement of 30% equity ownership by persons from historically disadvantaged groups.
It will be very interesting to see what Icasa does here. While it has the discretion to determine whether or not it will act in accordance with a ministerial policy direction, all it is legally required to do is to 'consider' a ministerial policy direction.
So, theoretically, even if Icasa agrees with the minister's interpretation of section 9(2)(b) of the ECA, it could still say that it is of the view that supporting broad-based black economic empowerment requires the 30% equity ownership threshold to remain in place for invitations to apply for individual licences.
This is an important point of distinction. The minister's proposed policy direction focuses on the public interest issue of, broadly, bridging the digital divide, but Icasa's ability to make regulations on 'such other conditions', as is provided for in section 9(2)(b), is specifically circumscribed by reference to section 4(3)(k) of the Icasa Act which empowers Icasa to make regulations on empowerment requirements 'to promote broad-based black economic empowerment'.
Diko has echoed those who say a legal battle is inevitable. I agree this seems likely. The courts will then decide if the 30% equity ownership by persons from historically disadvantaged groups is a peremptory requirement of an invitation to apply for an individual licence, in which case Icasa's Ownership Regulations cannot be amended to provide for equity equivalents; or if Icasa is empowered to prescribe alternatives to equity ownership obligations, in which case Icasa is free to amend its regulations in line with the equity ownership equivalents provided for in the ICT Sector Charter, as it is encouraged to do in the minister's draft policy direction – or to choose not to do so.
Whatever the outcome, poor legislative drafting is at the root of this fight, and one can only hope that Parliament takes a long, hard look at the problems this has caused, and resolves to improve. DM